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Weekly Gold & Silver Market Recap for March 30, 2012

Gold prices moved below $1,660 an ounce this week, as profit-taking accelerated due to a COMEX options expiration. A smaller-than-expected increase in U.S. manufactured goods orders added to downward pressures as the dollar moved to session highs versus the euro. However, the overall long-term projection remains strong. Goldman Sachs said this week, “As we look forward, our U.S. economists forecast subdued growth and further easing by the Fed in 2012, which should push the market’s expectations of real rates back down near zero basis points, and Gold prices back to our six-month forecast of $1,840 an ounce.” According to Goldman Sachs, Gold’s price is too low compared to real interest rates, and Matthew Lynn of Strategy Economics commented this week on the buying power by central banks in regards to Gold, saying, “By holding more Gold, central banks are insuring themselves against their own profligacy. They print money. The price of Gold goes up. And if they hold a lot of the stuff in their vaults, they are the big winners from the rise in price.”

The recent increases in crude oil prices have left former General Electric CEO Jack Welch distraught regarding the condition of the U.S. economic recovery. “It’s not taking off. We’re sort of relatively strong but not booming,” Welch said in a CNBC interview. “I am normally to one extreme or another, and I’m a little shaken about not knowing where this is going.” He said he has a lot of uncertainty about the economic recovery. The rising gasoline costs and tax uncertainty are key components to his opinion. “Gasoline prices — you can’t have this jump and not think that it affects the pocketbook,” Welch said. This is already starting to affect consumer confidence.

The ongoing strike among India’s jewelers – the first in almost seven years – has generated several concerns. Among those are which precious metals are to be taxed, and at what rates. However, there are hopes a compromise can be reached. A poll of retailers, jewelers and brokers indicates that Gold imports could drop about 30 percent, and India could lose its position as the top buyer to China by the end of the year. This could cause a loss of revenue of $1 million. “If the excise duty is corrected, the trade will be happy,” said Bhargav Vaidya, a director at the Bombay Bullion Association, one of the largest trade groups representing the industry in India. “The strike will not be indefinite, and customers will not go high and dry during wedding season.”

Middle Eastern news continued to simmer on the back burner this week. Syria responded to U.N. special envoy Kofi Annan’s peace proposal. The proposal is backed by Western powers, and though no deadline is set, the bloodshed will not drag on indefinitely. The economic sanctions being imposed on Iran are starting to affect Iranian citizens in a negative way, with inflation a huge concern. Ayatollah Ali Khamenei’s plans more domestic production to offset those inflation fears, saying this week, “If we manage to boost our domestic production, a large part of enemies’ efforts will no doubt be unsuccessful. … If we lift domestic production, we will solve the issues of inflation and unemployment, and our economy will be reinforced.”

The first budget from Spain’s new government came out this week, and its focus is mainly on austerity for the struggling country. Strategists at RBS wrote, “While the government is trying to contain debt, unemployment is rising, workers are increasingly leaving the country, and consumers are struggling.” Some Spanish citizens have risen up against austerity measures imposed upon them, with strikes in the nation affecting public transportation and factory production. However, it is business as usual in a good portion of the nation, as the populace is hoping to avoid a Greek-like default. Spain’s economy minister said, “Regardless of whether it (the strike) is considered a success or failure, the government is not going to alter the reform one jot.”

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Following the success of the Gold Britannia coins introduced in 1987, the Royal Mint began producing Silver Britannia coins as well, and issued 20,000 Silver coins in 1997, all of which were Proof. Since then, Silver Britannias have continued to increase in popularity for both their patriotic design and Silver content.

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